The massive Baby Boomer generation has been aging and reaching retirement for years now, with the last wave turning 53 this year. With pensions going by the wayside in the recent decades and many still feeling the lingering effects from the Great Recession, many Boomers likely hoped to have more saved for retirement.
Recent numbers show that Americans have $24 trillion set aside for retirement. This is no small number, but is it enough? Research shows that a little less than half of Boomers feel that they are on track to have enough money in retirement to pay for expenses. Retirement confidence post the Great Recession has gone up, but many still feel unsure about their retirement preparedness. Financial planners and advisors should be sure to focus on helping Baby Boomers plan for a comfortable future, even if – until now, they had no plan in place whatsoever.
Account for inflation
While it’s been reported that Boomers’ number one regret is not having a plan for retirement, this only increases the importance of having tax, income, and investment plans in place. Financial professionals and clients should take inflation into consideration when planning, because another often-cited regret is failure to do so. But advisors and clients should use the standard rule to diversify investment portfolios to generate an income stream for both the short and long term.
Financial planners should ensure that every client is knowledgeable about all the costs they’ll encounter in retirement: Not just living expenses like a mortgage, food and insurance, but things like doctor’s appointments and potential hospital stays that may not be covered by Medicare or other government plans. A client who isn’t thinking about such things is likely to have regrets.
A good way to ensure clients’ financial futures is to encourage them to save and help them set up a plan and budget to do so. It may sound simple, but Clarence Kehoe, Executive Partner at an accounting firm, told LifeHealthPro that as people begin to make more money later in their careers, they often spend it instead of save.
Another convincing way to encourage clients to save instead of spend is to plainly lay out how much money they will need for retirement, and how strategies like purchasing life insurance can help meet this need later in life.
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